UK job vacancies overtake jobless total
For the first time since records began, there are now more job vacancies in the UK than there are people registered as unemployed, official figures on Tuesday showed.
18 May 2022The Office for National Statistics (ONS) recorded 1,256,846 unemployed people in first quarter of the year while, by last month, vacancies had risen to a new record just shy of 1.3 million. The jobless rate of 3.7% was the lowest since 1974.
ONS data also showed a widening pay gap between those in the private and public sectors of the economy. Average pay rises for the former amounted to 8.2% in the year to March, but just 1.6% for the public sector.
The finance and business services sector showed the largest pay growth rate of 10.7%, partly because of strong bonus payments introduced to attract or retain staff.
He added that he understood many people were facing "anxious times" because of rising inflation, but said it was "reassuring that fewer people are out of work than was previously feared".
Darren Morgan, director of economic statistics at the ONS, said the data represented something of a mixed picture for the jobs market. "Since the start of the pandemic, around half a million more people have completely disengaged from the labour market," he said. "However, job vacancies are still rising, reaching yet another record high.
"Continued strong bonuses in some sectors, such as construction and especially finance, mean that total pay is continuing to grow faster than prices on average, but underlying regular earnings are now falling sharply in real terms."
“There’s some good news in today’s figures, with record pay growth in the private sector just about keeping wages ahead of inflation, and unemployment continuing to fall to its lowest since 1974," he said.
"However, this is masking now the tightest labour market that we have seen in at least half a century, with more vacancies than there are unemployed people for the first time ever, and well over a million fewer people in the labour force than on pre-pandemic trends.
"It’s this recruitment crisis that is fuelling higher private sector pay and bonuses and is also behind recent rises in interest rates. However rather than trying to dampen demand, we need to be doing far more to boost labour supply, which would support economic growth, raise household incomes and help contain inflation. In fact if anything, we’re cutting investment in employment support at just the time that we should be ramping it up."
Kitty Ussher, chief economist at the Institute of Directors, added that the growth in vacancies showed there were plenty of jobs for people wanting them.
“This is good news for households but it causes difficulties for businesses trying to retain staff and recruit for the right skills: our surveys show a massive 42% of firms citing ‘skills shortages’ as having a negative impact on their organisation," she said.
"This morning’s data puts the onus on government to prioritise workplace skills policy, to ensure firms have access to the talent they need.”
“Urgent action is needed to help alleviate the pressure facing businesses and communities across the UK. Putting pounds into the pockets of people facing hardship and stimulating business investment are two actions the government can take now that will help us to emerge from this crisis," he said.
Jonathan Boys, labour market economist at the Chartered Institute of Personnel and Development (CIPD), pointed to the widening pay growth gap between the public and private sectors.
"As the earnings data show, the squeeze is hitting some harder than others. The difference between total pay growth in the private and public sectors...is stark," he said. "Further help from government is inevitable and this should be targeted where need is greatest."
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ONS data also showed a widening pay gap between those in the private and public sectors of the economy. Average pay rises for the former amounted to 8.2% in the year to March, but just 1.6% for the public sector.
The finance and business services sector showed the largest pay growth rate of 10.7%, partly because of strong bonus payments introduced to attract or retain staff.
Job vacancies continue to rise as employees struggle to recruit
Chancellor of the Exchequer Rishi Sunak said: “The unprecedented support we provided through our Plan for Jobs has led to the jobs market remaining robust despite global challenges, with the unemployment rate near record lows and the number of pay-rolled employees at a record high."He added that he understood many people were facing "anxious times" because of rising inflation, but said it was "reassuring that fewer people are out of work than was previously feared".
Darren Morgan, director of economic statistics at the ONS, said the data represented something of a mixed picture for the jobs market. "Since the start of the pandemic, around half a million more people have completely disengaged from the labour market," he said. "However, job vacancies are still rising, reaching yet another record high.
"Continued strong bonuses in some sectors, such as construction and especially finance, mean that total pay is continuing to grow faster than prices on average, but underlying regular earnings are now falling sharply in real terms."
Recruitment crisis grows throughout the UK
Tony Wilson, director of the Institute for Employment Studies, said the figures highlighted the recruitment crisis facing many sectors in the UK economy.“There’s some good news in today’s figures, with record pay growth in the private sector just about keeping wages ahead of inflation, and unemployment continuing to fall to its lowest since 1974," he said.
"However, this is masking now the tightest labour market that we have seen in at least half a century, with more vacancies than there are unemployed people for the first time ever, and well over a million fewer people in the labour force than on pre-pandemic trends.
"It’s this recruitment crisis that is fuelling higher private sector pay and bonuses and is also behind recent rises in interest rates. However rather than trying to dampen demand, we need to be doing far more to boost labour supply, which would support economic growth, raise household incomes and help contain inflation. In fact if anything, we’re cutting investment in employment support at just the time that we should be ramping it up."
Kitty Ussher, chief economist at the Institute of Directors, added that the growth in vacancies showed there were plenty of jobs for people wanting them.
“This is good news for households but it causes difficulties for businesses trying to retain staff and recruit for the right skills: our surveys show a massive 42% of firms citing ‘skills shortages’ as having a negative impact on their organisation," she said.
"This morning’s data puts the onus on government to prioritise workplace skills policy, to ensure firms have access to the talent they need.”
Public vs Private - pay growth gap widens
Matthew Percival, director for people and skills at the Confederation of British Industry (CBI), said the data showed the labour market remained "red hot", with firms struggling under the weight of persistent labour shortages, rising energy prices and soaring inflation.“Urgent action is needed to help alleviate the pressure facing businesses and communities across the UK. Putting pounds into the pockets of people facing hardship and stimulating business investment are two actions the government can take now that will help us to emerge from this crisis," he said.
Jonathan Boys, labour market economist at the Chartered Institute of Personnel and Development (CIPD), pointed to the widening pay growth gap between the public and private sectors.
"As the earnings data show, the squeeze is hitting some harder than others. The difference between total pay growth in the private and public sectors...is stark," he said. "Further help from government is inevitable and this should be targeted where need is greatest."
Related articles:
- UK job vacancies hit another record high
- Yet another surge in UK job vacancies
- UK job vacancies hit a new record high
Read more news and views from David Sapsted in the Spring 2022 issue of Think Global People.
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